November 3, 2003
Council urges PSC not to 'rush to judgment' on controversial proposed energy mandate
The New York State Public Service Commission (PSC) should await detailed research on the costs, feasibility, and reliability of a proposed energy mandate before making a recommendation on the controversial proposal, The Business Council says.
The Council submitted a brief on Oct. 31 in a PSC proceeding that is expected to lead to a "recommended decision" on the proposed "renewable portfolio standard (RPS)." The administrative law judge overseeing the proceeding has indicated that a recommended decision on the proposal is possible even before studies on these key issues are finished.
The PSC initiated the current proceeding after Governor George Pataki proposed the controversial RPS in his 2003 State of the State message. Specifically, he directed the PSC to develop a standard that would require New York's businesses and consumers to buy at least 25 percent of their electricity from "renewable energy resources" such as solar power, wind, and fuel cells by 2013.
"A recommended decision should not be issued before critical studies are completed with respect to cost, feasibility, and reliability," The Council's brief said. "These matters are far too important to be treated as mere ancillary elements of the deliberations."
"Instead of a rush to judgment that presents the commission with a single up-or-down plan, the ALJ [should] give the commission a range of options" on what standard should be adopted, when, and whether it should be mandatory or voluntary, the brief noted.
New York's businesses and consumers are still paying "hundreds of millions of dollars a year in excess power costs because a similar rush to judgment was made by elected bodies in adopting the now-infamous 'six-cent law,'" the brief said.
That law fixed prices of electricity in many long-term contracts between utilities and generators at no lower than six cents per kilowatt. This eventually required New York's businesses and consumers to pay inflated costs when the the cost of generation fell well below six cents per kilowatt.
"Given the economic burden of New York's already high energy prices, and the enormous cost of the power blackout this past summer, the commercial and industrial business community can only view with alarm a proceeding of this magnitude being rushed toward a decision before feasibility, cost and reliability issues have been clarified," the brief said.
"Even the appearance that cost is a secondary consideration will send shock waves through the business community," the brief noted, adding that the PSC's Feb. 19 order initiating the current proceeding emphasized that the PSC "does not want New Yorkers to be vulnerable to 'price spikes.'"
The fact that the proposal could make the RPS mandatory suggested an underlying belief that consumers would not freely choose renewable sources because the costs are too high, The Council noted. "We fear that costs could be dramatically higherbut we don't know for certain. And neither does the commission."
The brief emphasized several other points about the proposed RPS:
- The issues of cost, reliability, and feasibility are intertwined, and issues in none of these categories can be assessed without a full understanding of issues in the other two. For example, if New York overestimates the ability of renewables to meet future demand, the reliability of the system is sure to be undermined, and inevitable supply shortages "are bound to send prices skyrocketing," the brief said
PSC also knows too little about transmission issues raised
by the proposed RPS and must await detailed studies being
prepared by the New York State Independent System Operator
(ISO) and others.
The most likely source of new renewable energy is wind, but its potential lies mainly in western New York, which already has ample power. Wind is a much less promising resource downstate, where generation is most needed. What's more, wind is least likely to be a productive source during the summer, when statewide and downstate demand are both at their peaks.
- There is nothing in the record in the PSC proceeding to conclusively justify any particular standard or timetable. The brief noted that there is limited evidence in the record of any effort to weigh "the costs versus the benefits of a mandate of 25 percent by 2013, as versus any number of other potential combinations (say, 20 percent by 2010, or 30 percent by 2023)."
PSC must fully consider a voluntary standardand that,
too, should await pending studies on feasibility and other
"NYSERDA and others are spending heavily to expand renewable capacity in New York, and it appears that every watt of new renewable capacity they bring on line is immediately spoken for," the brief said. "What evidence is there in the record that this system of active development, in a market that remains free, cannot work- should not even be given a chance to work for, say, the next five years or so?"